SINGAPORE (Reuters) – The US dollar suffered a loss on Wednesday and the euro relied on gains as investor sentiment plummeted following a better-than-expected sentiment survey in Germany and a big spending speech from a nominee U.S. Treasury Secretary Janet Yellen.
Yellen’s comments, urging lawmakers to “work hard” on coronavirus relief and not worry too much about debt, helped take this week’s risk prevention tone and set a record dollar target from one month high.
The euro broke support around $ 1.2050, picking up around 0.4% on the dollar overnight to hit $ 1.2145, following a ZEW investor sentiment analysis that overwhelmed Italy’s forecast and government surviving a vote of confidence.
It held close to that level in Asia, with Australian and New Zealand dollars aware of risk aversion in morning trading to maintain moderate overnight increases. The Aussie last went up 0.2% at $ 0.7707 and the kiwi went up 0.1% to $ 0.7122.
“The encouraging bias of the emerging Biden management economic policy is at the heart of market attention again,” ANZ analysts said in a note to the clients.
“However, expectations between reflation and conventional soft economic data may continue to fluctuate for a longer period of time,” they said, limiting upside down for currencies like the kiwi.
Joe Biden is inaugurated as U.S. President at noon in Washington on Wednesday (1700 GMT), though traders are focusing more on his policies than the ceremony.
The safe yen was sold with the improvement in sentiment and a short discount of over 104 per dollar, as well as falling against other major currencies. It eventually traded at 103.84 per dollar.
Sterling was backed by the Bank of England’s chief economist’s forecast that the British economy will begin to “recover at the knot level” in the second half of the year, and extended overnight gains slightly to $ 1.3649.
The Chinese Yuan shaken small gains in offshore trade at 6.4757 to the dollar ahead of a monthly interest rate where traders do not expect any change in key one- or five-year loan rates.
Later on Wednesday Malaysia’s central bank will meet, with a decision to come at 0700 GMT. Nine out of 15 economists surveyed by Reuters expect it to cut interest rates for historical levels.
The Bank of Canada is expected to maintain stable rates when it announces a policy at 1500 GMT.
Reciting with Tom Westbrook; Edited by Lincoln Feast.